Unmasking the Ultimate Beneficial Owner: A Critical Imperative for Legal and Financial Integrity in Africa

As legal professionals at the forefront of regulatory compliance, we at Fonyam and Partners Law Firm understand that the journey to uncover beneficial ownership is a fundamental pillar of modern due diligence. It is a meticulous process of peeling back layers of corporate veils to answer the most critical question: Who ultimately owns, controls, and benefits?

This backward journey, from the nominal to the ultimate, is not merely an academic exercise. It is the bedrock of financial integrity, a crucial defence against illicit financial flows, and a non-negotiable requirement under evolving regulatory frameworks across Africa.

The Anatomy of Ownership: From Nominee to Ultimate

The process typically unfolds in three distinct layers:

1. The Formal Owner (Owner): This is the name that appears on the company register—the legal shareholder. However, this is often just the starting point, a nominee who holds title but exercises no real control.
2. The Beneficial Owner (BeneficialOwner): Here, we find the individuals who derive actual benefit from the entity or assets. They may act through a complex web of intermediaries, fiduciaries, or legal arrangements designed to obscure their identity.
3. The Ultimate Beneficial Owner (UBO) (UltimateBeneficialOwner): This is the final destination of our investigation: the natural person(s) who sit at the apex of the control structure. They are the ones who pull the levers of power and enjoy the final economic benefits.

Each layer removed is a step toward true transparency and the very essence of AML (Anti-Money Laundering) and duediligence.

The African Context: A Patchwork of Progress and Challenges

The imperative for UBO transparency is acutely felt across our continent, where the risks of corruption, money laundering, and terrorist financing are significant. Let’s examine the landscape in key regions:

The CEMAC Region: A Unified Push with BEAC at the Helm

The Bank of Central African States(BEAC) has been a driving force. Its 2018 regulation made Central African FIUs the central repositories for beneficial ownership information. While a significant step, implementation varies. In Cameroon, the challenge often lies in the practical enforcement and verification of data submitted by legal entities. A case in point is the ongoing need for robust due diligence in the extractive industries, where complex ownership structures can mask the true beneficiaries of lucrative contracts, a concern frequently highlighted by organizations like Publish What You Pay.

The WAEMU Region: Stricter Directives Leading the Way

West Africa has shown remarkable progress.The WAEMU Banking Commission has implemented stringent directives requiring credit institutions to identify and verify their clients’ UBOs. A telling case was in Senegal, where investigations into public procurement scandals revealed how shell companies with opaque ownership were used to siphon state funds. The ability to pierce these corporate veils is critical for recovering assets and upholding the rule of law.

Pan-African Case Study: The “Panama Papers” and “Pandora Papers” Fallout

The global leaks provided stark,continent-specific examples. In Angola and Mozambique, revelations showed how politically exposed persons (PEPs) used offshore structures to conceal ownership of assets and wealth derived from state resources. These cases underscore why a relentless “followthemoney” approach is indispensable for African compliance officers and legal practitioners battling dirtymoney.

The Way Forward for Legal Practitioners and Businesses

For law firms and compliance officers, this evolving landscape means that standard KYC (Know Your Customer) checks are no longer sufficient. We must:

· Conduct deep-dive, multi-jurisdictional due diligence to unravel complex holding structures.

· Leverage technology and open-source intelligence (OSINT) to verify declared UBO information.

· Advocate for and assist clients in adhering to not just the letter, but the spirit of national and regional UBO regulations.

The journey to unmask the UBO is more than a compliance checkbox; it is a professional and ethical commitment to fostering transparency, attracting clean investment, and safeguarding the economic future of Africa.

Banyong Fonyam Jonie Jr.

Managing Partner

Fonyam and Partners Law Firm